Here the Court of Appeal granted an injunction which restrained a building contractor (Harbour View) from presenting a winding-up petition, overturning the high court's decision at first instance. Harbour View had been engaged under two separate contracts based on a JCT Intermediate WCD (2011) to carry out works at two separate sites. The employer (Wilson) failed to pay against two interim certificates (August 2013 and September 2013), leaving a sum of over GBP 1.6 million owing. No effective payless notices were served, and although payment was made against one certificate some two months later, a total of GBP 1.2 million remained outstanding.
In January 2014, Harbour View's solicitors gave notice of the contractor's intention to terminate for non-payment. No formal notice was given, and Wilson's solicitors then purported to terminate for repudiatory breach. In the meantime, Wilson notified Harbour View of its cross-claims, based on a re-valuation of the works by a new contract administrator. Harbour View's response was to notify Wilson that it would present a winding up petition against it; Wilson applied for an injunction restraining the petition. Harbour View was in financial difficulty and had arranged a creditor's meeting for the day after the hearing, with a view to appointing a liquidator.
At first instance the court refused to grant the injunction sought, based on several factors, including that the employer's cross claims were not genuine. Wilson then appealed on 3 grounds:
- that the petition debt was substantially disputed,
- that TCC established practice was to refuse enforcement of interim payments to an insolvent contractor and
- there were serious and genuine cross claims.
The Court of Appeal allowed the appeal, granting a permanent injunction. It accepted grounds (i) and (iii) of Wilson's appeal but did not accept that the TCC automatically refuses summary judgment or restrains a winding up petition where the contractor is insolvent.
Of interest is the interpretation of the relationship between the amended Construction Act and the JCT insolvency provisions, particularly that s.111(10) is not restricted to situations where the contract has already been terminated for insolvency, or is still capable of such termination. It also reinforced the need for careful examination of all the evidence given the magnitude of the remedy sought.
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